Public Policy and International
Affairs

Gambling on profits,
etc.

Casino revenues are no sure
bet

Cash-starved communities full of tax-weary constituents have
begun, in increasing numbers, to look at legalized casino
gambling as a source of revenue. The phenomenal cash flow of
casinos in Atlantic City has prompted advocates to campaign
for legalized gaming in Philadelphia, Washington, D.C., and
other Atlantic seaboard communities.

Paul Lande, senior fellow at Hopkins's Institute for
Policy Studies (IPS), recently studied the implications of
legalized casinos in Baltimore. "I was surprised at how much
business these casinos generate, and how rapidly they grow,"
he says. He found that from 1982 to 1990, dollars spent on
legal gambling grew throughout the United States at almost
twice the rate of personal incomes.

Lande notes that for Baltimore, casino gambling might
recapture revenue currently flowing to Atlantic City from
Baltimore gamblers, and fit into a local strategy to
increase tourism. But, he warns, "my concern is that these
casinos [in Atlantic City] are so successful because they
have a regional monopoly. As more cities legalize gaming,
what will the source of growth be?"

The Abell Foundation of Baltimore sponsored Lande's
study. The foundation wanted him to survey casino gaming
throughout the United States and identify the likely
consequences should Maryland and Baltimore legalize it.
Among his conclusions:

"The net economic benefit to the location depends
heavily on the ability of the casino to capture business
from other communities," Lande says. If Baltimoreans are the
only ones who spend their money in Baltimore casinos, the
odds are good they'll be spending dollars they might
otherwise have spent on movies, video rentals, Orioles
tickets, and other local goods and services. Lande notes
that when South Dakota legalized gambling in the town of
Deadwood (which now has 84 casinos), local dry cleaners,
auto dealerships, service stations, clothing stores, and
other establishments saw their revenues decline within the
first year.

The ability to attract out-of-town gamblers decreases
as competition erodes regional monopolies. Lande says
Atlantic City welcomes 30 million visitors a year; of that
number, 29 million come by bus or car. That means they live
within driving distance. If Philadelphia, Baltimore, and
other Atlantic seaboard cities establish their own casinos,
will people from those cities still bother to drive to
Atlantic City? Probably not, Lande says, at least not 29
million times. Other seaboard cities must not assume they
can duplicate Atlantic City's success, because they will be
entering the market as smaller (and thus weaker) regional
monopolies.

Communities quickly become dependent on gambling
revenues. Lande says that in Atlantic City, casinos provide
63 percent of the city's employment and 69 percent of its
school funding. What would happen, he asks in a cautionary
tone, if Baltimore were to become similarly dependent on
gambling revenue, then begin losing customers to new
competing casinos in, say, Philadelphia and Washington?

Crime follows casinos. Lande found that in the first
three years of legalized casino gaming in Atlantic City
(1978 to 1981), that city went from 50th in the country in
per capita crime to first. Crime spilled over into
neighboring communities, as well--communities that derive
little benefit from the city's casino business. Law
enforcement and prison costs go up, Lande says, and
residents must live in communities made more dangerous.

Though he maintained neutrality in his study report,
Lande admits to some personal reservations about legalizing
casinos. Besides increased crime and dependence on a
vulnerable source of revenue, he points out other problems.
When local property owners fund schools through taxes, they
can hold local officials accountable for how their tax
dollars are spent. Lande wonders if the same sort of
accountability would exist were schools primarily funded by
money from out-of-town gamblers.

Beyond that, says Lande, there is a moral dimension.
The state already promotes gambling through advertisements
for the Maryland lottery. "The problem with casino gaming
is, it expands the state's interest in promoting gambling,"
he says. "What kinds of behaviors are encouraged?" --Dale
Keiger

The debate on race and intelligence
continues

The controversy over research that links intelligence,
genetics, and race prompted the Hopkins Black Student Union
and other student organizations to sponsor a forum at
Shriver Hall in December. Three Hopkins faculty members and
a guest speaker from Princeton University debated "Ability,
Achievement, and Race" before a large and vocal audience.

The 1994 publication of The Bell Curve, by Charles
Murray and the late Richard J. Herrnstein, has brought
renewed attention to the work of Hopkins sociology professor
Robert Gordon. In addition, a feature story in Rolling Stone
magazine about the controversial Pioneer Fund, which
promotes research in eugenics, noted that Gordon has been a
recipient of its largesse. Partway through the fall
semester, some students advocated a boycott of Gordon's
courses and called for his dismissal, despite his status as
a tenured faculty member.

Gordon opened the forum with a rapid-fire summary of
his research conclusions--findings that, as he explained
them, basically match several of those of The Bell Curve's
authors: that intelligence is measurable and heritable, that
environment plays a lesser role than genetics in determining
intelligence, that among the races blacks tend toward lower
intelligence test scores than whites, and that these
findings have serious implications for society. Gordon
claimed that despite efforts at improving education, the
differences in IQ test scores among races have not
diminished. "It is something that has a resistance to change
that is troubling," he said.

Howard Taylor, professor of sociology at Princeton,
then delivered a rebuttal. "Don't let anybody ever tell you
intelligence is something measured by an IQ test," Taylor
said. He accused Gordon, Murray, et al. of ignoring
significant environmental factors, including expectations:
when minority students keep hearing that they are low
achievers, Taylor said, they begin to achieve less.

Taylor attacked some of the studies on which Gordon has
based his work. In one study, which purported to examine the
intelligence of identical twins raised apart in
significantly different environments, Taylor says the
appendices to the research show that a notable number of the
twins grew up in the same neighborhoods, lived in nearby
houses, attended the same schools, and received the same
guidance counseling. One pair was described as "living
amicably next door to each other." Said Taylor, "If they're
'separated,' how can they be living amicably next door to
each other?"

Taylor also accused Gordon of using outmoded theories.
"You'll notice a lot of the literature he cites is old,"
Taylor said. Both Gordon and the authors of The Bell Curve
failed to consider data that does not support their
conclusions. "They make it look like science, but it's not,"
he said.

From Hopkins's Institute for Policy Studies,
sociologist Patricia Fern ndez-Kelly accused Murray and
Herrnstein of confusing correlation with cause. Because the
authors noticed a correlation between low IQ test scores and
poverty, she said, they jumped to the conclusion that low IQ
causes poverty. "Maybe they have the causal relationship
backwards," she said; perhaps poverty causes low scores on
IQ tests. She wryly likened their logic to noticing a
correlation between owning a house and having money in the
bank, and therefore assuming that owning the house caused
the money to be in the bank.

The presentations were followed by a contentious
question-and-answer period, with most of the speakers
assailing Gordon. Hopkins geography professor David Harvey
asked why, if the research of scholars like Gordon and
Murray is so demonstrably flawed, does it command so much
attention? Said Harvey, "The fact that we're here now is a
measure of how deteriorated is the state of race relations
in this society."

Much of the research in the field relies on
categorizing people according to race. One questioner, an
African American man, unintentionally pointed out the
inherent pitfalls of such classifications. He took the
microphone to express his disappointment that there were no
black speakers on the stage. This caused considerable
amusement in the hall and among the panelists--the
questioner apparently did not realize that Howard Taylor of
Princeton, whose skin did not appear appreciably darker
under stage lights, is African American. --DK

Germans remain unaware of non-profit
sector

Non-profit organizations (NPOs) are a significant and
underestimated sector of the modern German economy,
according to two scholars from Hopkins's Institute for
Policy Studies who presented their findings at a recent
seminar conducted by Hopkins's American Institute for
Contemporary German Studies.

IPS director Lester M. Salamon noted that NPOs employ 1
million people, and accounted for 11 percent of the former
West Germany's economic growth during the '80s. He offered
more statistics: 40 percent of German hospital patient-days
take place in hospitals operated by NPOs. Sixty percent of
people in residential-care facilities and 33 percent of all
children in daycare receive these services from NPOs.

Yet most Germans remain unaware of how important the
third sector is to their economy, said Helmut K. Anheier, an
IPS research associate. He noted a survey in which only 29
percent of respondents said they had heard of Diakonie, a
network of German Protestant NPOs, even though Diakonie
employs more people than Volkswagen, the largest German
industrial corporation. Anheier believes that the German
government should begin acquainting its constituents with
the size and importance of the non-profit sector in order to
avoid public suspicion that the scope of the sector had been
deliberately concealed for some reason. Such suspicion would
erode public support for non-profit institutions, Anheier
said. --DK